Inside the world of business

Suppliers must not be bottom of list

SPARE A thought for the State’s suppliers. Yesterday’s proposal to increase the cap on the maximum size of supermarkets operating in Ireland is the latest in a number of proposed changes that may ultimately affect primary producers and suppliers to multinationals.

While the proposed changes to Retail Planning Guidelines will first and foremost have an impact on small retailers, which are already struggling to complete with large, often out-of-town supermarkets, its impact may be felt further down the supply chain.

While the prospect of more international supermarkets entering the Irish market may be good for competition – and for consumers as prices are forced down – there is a fear that suppliers will bear the brunt of price cuts.

Similarly, this week’s news of the forthcoming two percentage point hike in VAT is bound to affect suppliers. The fear is that supermarkets, in absorbing the price increases, will turn to suppliers to make up the difference.

Suppliers already face huge demands in attempts to get their products on supermarket shelves.

While “hello money” is illegal in this State, tough negotiations are part and parcel of the retailer-supplier relationship. Long-term agreements – where suppliers pay retailers a percentage of the price once a threshold of sales is reached – for example, are commonplace, although often this is also of benefit to suppliers who benefit from huge sales exposure. Reports suggest that some of Britain’s biggest retailers are increasing the pressure on suppliers in the run-up to Christmas, as consumer spending remains under pressure.

While there is no evidence of this here, suppliers are still on the back foot when it comes to price negotiation with retailers.

All of which highlights the need for the Government to act quickly on the proposed statutory code of practice between retailers and suppliers to ensure suppliers, which play a central role in the domestic economy, can operate in a fair, transparent market.

Cracks appearing for Paddy the Plasterer?

THE DOWNTURN in the post-Ahern era would appear to be hitting Paddy the Plasterer among others, if the latest accounts for Abbott Lodge Ltd are anything to go by.

The company is the operator of the Abbott Lodge guest house on Gardiner Street, Dublin, which made a profit of €2,818 in 2009 and €21,6976 in 2008.

However, the latest accounts for the company, described as modified accounts for the year ended December 31st, 2010, show a fall in the value of the company’s fixed assets, to €76,153 from €103,029 at the outset of the year, and a rise in the amount due to creditors, to €127,545, from €48,874 at the outset of the year.

No profit figure is given although the modified balance sheet shows accumulated losses of €42,736 at the year’s end, compared with accumulated profits of €54,879 at the beginning of the year. That doesn’t look good.

The company is owed by its directors, Paddy Reilly and his colleague Brian Moloney (52), who has an address in Templeogue, Dublin. A note in the accounts says the directors have advised that the company will continue as a going concern for the foreseeable future.

Reilly became something of a household name in 2006 when he was named as Paddy “the Plasterer” on RTÉ by then taoiseach, Bertie Ahern, when he was listing the men who had contributed to “dig-outs” for him when he was minister for finance and had safes stuffed with cash.

In the latest annual return for Abbott Lodge, Reilly is described as a builder.

Matters may not be as bad as they first appear. The accounts for the company for 2008 disclosed that the directors were paid €154,391 that year in rent.

No information on any rent payments appears in the latest accounts, but chances are the landlords are still getting paid.

TODAY

The Oireachtas Committee on Communications, Natural Resources and Agriculture will by briefed by industry and Siptu on the future of offshore exploration in Ireland.

You can get the latest news each business day at irishtimes.com/business or by following us on Twitter at twitter.com/IrishTimesBiz. We also have a Facebook page at facebook.com/IrishTimesBiz where you can read the latest business headlines, blog posts and reader polls.